Item 1.01. Entry into a Material Definitive Agreement.
On July 18, 2018, Keryx Biopharmaceuticals, Inc. (the “Company”) entered into a Loan and Security Agreement with Silicon Valley Bank
(“SVB”) pursuant to which SVB made a revolving line of credit available to the Company in an aggregate amount of up to $40 million (the “Revolving Loan Facility”). Availability under the Revolving Loan Facility is subject to
a borrowing base comprised of eligible receivables and eligible inventory as set forth in the Loan and Security Agreement. Proceeds from the revolving line of credit may be used for working capital and general business purposes. The Revolving Loan
Facility is secured by substantially all of the Company’s personal property other than intellectual property. The Revolving Loan Facility restricts the Company’s ability to grant any interest in its intellectual property other than certain
permitted licenses and permitted encumbrances set forth in the Revolving Loan Facility.
The principal amount outstanding under the revolving line bears
interest at a floating rate per annum equal to the greater of (i) 2.0% above the “prime rate,” as reported in The Wall Street Journal and (ii) 6.75%, which interest is payable monthly. Principal amounts borrowed under the revolving
line of credit may be repaid and, prior to the maturity date,
re-borrowed,
subject to the terms and conditions set forth in the Revolving Loan Facility. The Revolving Loan Facility will mature on the date that
is two years after the effective date of the Loan and Security Agreement. Upon entry into the Loan and Security Agreement (payable in installments and subject to certain conditions), and at the one year anniversary thereof, the Company must pay to
SVB a fee equal to 1.00% of the Revolving Loan Facility. The Company is also required to pay on a quarterly basis a fee equal to 0.25% per annum of the average unused portion of the revolving line. The Company must pay a termination fee of 2.00% of
the Revolving Loan Facility, if the revolving line is terminated prior to the maturity date, subject to certain exceptions.
The Revolving Loan Facility
includes customary representations and warranties and affirmative and negative covenants. The affirmative covenants include, among others, covenants requiring the Company to maintain its legal corporate existence and governmental approvals, deliver
certain financial reports and account information, maintain insurance coverage and satisfy certain requirements regarding deposit accounts. The Company must maintain a liquidity ratio of at least 1.50:1.00, as of the last day of each month, and must
also achieve the minimum revenue specified for a particular test period, measured as of the last day of each month on a trailing three-month basis. The negative covenants include, among others, restrictions on transferring collateral, incurring
additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, selling assets and suffering a change in control, in each case subject to certain exceptions.
The Revolving Loan Facility also includes events of default, the occurrence and continuation of which could cause interest to be charged at the rate that is
otherwise applicable plus 5.0% and would provide SVB with the right to exercise remedies against the Company and the collateral securing the Revolving Loan Facility. These events of default include, among other things, any failure by the Company to
pay principal or interest due under the Revolving Loan Facility, a breach of certain covenants under the Revolving Loan Facility, insolvency, a material adverse change, the occurrence of any default under certain other indebtedness in an amount
individually or in the aggregate greater than $250,000, and one or more judgments against the Company in an amount greater than $250,000 individually or in the aggregate.
The foregoing description of the Loan and Security Agreement is qualified in its entirety by reference to such agreement filed as Exhibit 10.1 of this
report, which is incorporated herein by reference.
The representations, warranties and covenants contained in the Loan and Security Agreement were made
only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential
disclosures exchanged between the parties in connection with the execution of such agreement. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to such agreement instead of
establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under such agreement and should not
rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject
matter of the representations and warranties may change after the date of such agreement, and this subsequent information may or may not be fully reflected in our public disclosure.